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| First Republic Bank Hires Advisors to Explore Options, Including Sale |
First Republic Bank, based in San Francisco, is exploring options including a sale or asset trimming, as the bank grapples with unprecedented volatility. The bank has hired Lazard and McKinsey & Co. as advisors, while Bloomberg reports that Wall Street CEOs and US officials are exploring the possibility of government backing to secure a deal to shore up the bank. Shares in First Republic Bank fell in after-hours trading on Tuesday following the announcement, after rising 30% earlier in the day after reports suggested that JPMorgan Chase CEO Jamie Dimon was leading rescue talks. The bank's shares are down close to 90% since the beginning of March.
In Europe, UBS is offering to buy back €2.75 billion ($2.97 billion) worth of bonds it issued less than a week ago in light of its takeover of Credit Suisse. UBS's stock has rebounded over 12% since before the takeover, but fell nearly 20% early on Monday. However, the bank's investors are now starting to view the acquisition as a positive development for UBS. After the shares fell, UBS is now near the level it was trading at before Silicon Valley Bank collapsed earlier this month.
Treasury Secretary Janet Yellen has tried to ease fears by stating that the situation at First Republic Bank is stabilizing, and that the government is prepared to step in to protect depositors of other banks if there is a risk of a run on the banking system. Meanwhile, investors will be closely watching the Federal Reserve as it discloses its next move on interest rates following a two-day meeting of its policy-setting committee. Interest-rate futures indicate that traders expect an increase of a quarter of a percentage point.
Regional bank stocks have been struggling recently, but on Tuesday, PacWest Bancorp stock rose 19%, Western Alliance climbed 15%, and KeyCorp closed 9% higher. The U.S. KBW Bank Index rose 5%, its best daily performance this year. On Wednesday, shares of PacWest and KeyCorp were down in recent trading, while Western Alliance's stock jumped another 9% on the morning of the 22nd.
